Is Mario Draghi Preparing To 'Spring A Trap' On The Germans In Just A Couple Months?

Writing in
The Telegraph, Ambrose Evans-Pritchard, reports on the
suspicious of London bankers who are anticipating Mario Draghi's
next move as head of the ECB:

The small band of City specialists who really have their fingers
on the pulse of the ECB are split on what happens next:

The Herr Draghi camp thinks he means what he says about
respecting the EU Treaties and Lisbon’s Article 123 prohibiting
monetary financing of deficits.

The Signor Draghi camp thinks he is slowly combining an
alliance of ECB doves ready to spring a trap on the
Bundesbank, with rate cuts to 0.5pc by February and then
signals of forthcoming QE – most likely by playing the
forward-looking "deflation card" and muttering about impaired
"monetary transmission channels".

One notes that Signor Draghi dodged the crucial the question on
QE in his interview with the Pink Paper on Monday. The
transcripts show that he refused to rule out printing money.

"We take that as a yes," said David Owen from Jefferies Fixed
Income.

The "Herr Draghi" vs. "Signor Draghi" thing is a clever touch.

Meanwhile, writing in the FT, Gavyn Davies allies himself with
the Signor Draghi camp, saying that for all of his hawkish talk,
the fact of the matter is that the ECB is using really using its
balance sheet to end the crisis.

Whatever they may claim to the contrary, the ECB is finding
that it has no choice but to use the central bank balance sheet
to stabilise the euro crisis. I am not
complaining about that. The alternative would have been far, far
worse. But we should call a spade a spade. This is quantitative
easing on a significant scale, and the lines between this form of
QE, and the direct monetisation of budget deficits, which is
forbidden by the spirit of the eurozone treaties, are becoming
increasingly blurred.